Complex Arbitrations: An Overall View of the ICC Rules - II
This article is the second of a series of articles on the ICC Rules that regulate complex arbitrations. In the first article, the structure of the ICC Rules on complex arbitrations was examined. The details of the ICC Rules, and the requirements thereto, will be examined in this article and the upcoming one.
In this article, Article 7 that regulates the joinder of additional parties, and Article 10, which regulates consolidation of arbitrations, will be examined. Article 8 and Article 9 that regulate claims between multiple parties and arbitrations with multiple contracts, respectively, will be the topic of the third article of this series.
Joinder of Additional Parties – ICC Rules Article 7
Article 7 of the ICC Rules regulates the joinder of additional parties to an arbitration. While evaluating the joinder of additional parties as per Article 7, three points should be kept in mind. Firstly, the ICC Rules, unlike some other institutional rules, regulate only the joinder, and not the intervention. In other words, a third party cannot intervene in an existing arbitration under the ICC Rules on its own discretion. One of the parties to the arbitration must join that additional party to the arbitration. Secondly, the party who seeks to join an additional party must address a claim against the additional party. A party cannot seek to join an additional party without addressing any claim against it, merely to defend or support its position against the counterparty’s position. Thirdly, for a joinder to be affected, there must be an existing arbitration. Filing a new arbitration using Article 7 as its basis is not allowed. In light of this information, the provisions of Article 7 are examined, below.
There are four subparagraphs in Article 7. The first subparagraph covers the request for joinder (“RfJ”). It sets out how an additional party may be joined to an existing arbitration. The second subparagraph details the content of the RfJ. The third and fourth subparagraphs deal with the references to the request for arbitration and answer to the request for arbitration and set out the mutatis mutandis application of relevant articles, as they have common points as with the RfJ, and answer thereto.
Firstly, an additional party may be joined by any of the parties (claimant, respondent or an additional party). Although it is conceivable that the claimant might address the request for arbitration to all relevant parties from the outset of arbitration, and there may be no need to allow the claimant to join an additional party, it is possible that during the course of the proceedings, the circumstances might give rise to the need for the claimant, as well.
The party wishing to join an additional party shall submit its request for arbitration to the Secretariat against the party which it wished to join, and this request is defined as a request for joinder. The legal effects of a RfJ are equivalent to those of a request for arbitration. The date on which the RfJ is received by the Secretariat shall, for all purposes, be deemed to be the date of the commencement of arbitration against the additional party. Thus, once the RfJ is submitted to the Secretariat, the additional party, immediately and automatically, becomes a party to the arbitration. This rule is different than the ICC 1998 Rules, under which the Court must, firstly, decide whether to join an additional party to the arbitration.
The additional party may be any third party who is not already a party to the arbitration. Although that third party becomes an additional party to the arbitration, immediately and automatically upon submission of the RfJ, this does not mean that it will remain as such. As per the reference to Article 6(3)-6(7) and 9 of the ICC Rules, the additional party must be a third party whom might also be bound by the arbitration agreement. It must be one of the signatories of the arbitration agreement, or the agreement could be extended to it. Otherwise, the additional party may be excluded from the arbitration as a result of the prima facie assessment by the Court, or by the arbitral tribunal in one of its decisions.
Once the RfJ is notified to the additional party, it has the same rights and obligations as any other party. It may submit an answer, raise jurisdictional objections, file claims, and request joinders of additional parties. However, the ICC Rules do not have a provision on an additional party’s right to submit counterclaims. The ICC Rules clearly stated that the additional party may make claims as per Article 8, which regulate claims between multiple parties.
Another important point with regard to the joinder of an additional party is its timing. As per Article 7(1), no additional party may be joined after the confirmation or appointment of any arbitrator, unless all parties, including the additional party, otherwise so agree. This provision is a clear reflection of the ICC Rules’ approach to the importance of the parties’ participation in the constitution of the arbitral tribunal, which has become a very important topic, particularly following the Dutco case.
The last phrase of Article 7(1) sets out that the Secretariat may establish a time limit for the submission of a RfJ. It is arguable that the Secretariat cannot know if any party is planning to submit a RfJ. This argument would be acceptable. However, the ICC Rules relate to cases where the Secretariat could understand, or one of the parties notifies that it is planning to submit a RfJ. With this phrase, the ICC Rules aim to prevent delays that can be caused by one of the parties in submitting a RfJ.
Consolidation of Arbitrations – ICC Rules Article 10
Article 10 of the ICC Rules regulates consolidation of arbitrations. Consolidation, as referred to under the Rules, is a procedural mechanism through which to merge two or more pending ICC arbitrations. If the arbitrations are consolidated, one single arbitral tribunal decides on all issues. The main purposes of consolidation are, amongst others, providing procedural efficiency, lowering the costs, elimination of risks that may arise from inconsistency between decisions granted in separate proceedings, and enabling arbitral tribunals to have a better understanding and fuller view of the transaction at issue.
The competent authority to consolidate arbitrations is the Court. The decision on consolidation is administrative, not legal. It is not prima facie unlike the Court’s decisions as to jurisdiction. Accordingly, the Court’s decision on consolidation is final, and arbitral tribunals cannot decide again as to consolidation thereafter.
The Court cannot make such decision on its own initiative. The Court shall decide on consolidation only if one of the parties has submitted a request. However, the Court is entitled to decide on consolidation at its own discretion. With the usage of the word ‘may’, the ICC Rules clarifies that the Court is not obliged to consolidate the arbitrations, even if the conditions have been met. In deciding whether to consolidate, the Court may take into account any circumstances it considers to be relevant, including whether one or more arbitrators have been confirmed or appointed in more than one of the arbitrations and, if so, whether the same or different persons have been confirmed or appointed.
The conditions for consolidation are set out in Article 10 of the ICC Rules. This article does not specify the form and content of the request for consolidation; thus, the request may be made even with a simple letter addressed to the Court. Moreover, this article does not establish a time limit. The Court will consider the phases of the arbitration, and will decide on the matter without any time limitation.
As is pointed out in the article, among the provisions on complex arbitrations, Article 10 stands alone by not making any reference to Article 6(3)-6(7). This is conceivable as Article 10 covers the period after the prima facie assessment as to jurisdiction is made by the Court, and the subject matter concerning consolidations concerns arbitrations that are pending.
The first condition for consolidation is the presence of two or more arbitrations. These arbitrations must be conducted according to the ICC Rules. The Court cannot consolidate the arbitrations governed by any rules other than the ICC Rules. Once the arbitrations are consolidated, the dispute shall continue to be discussed in one arbitration proceeding, only (in the first one that had been initiated, unless the parties agree otherwise). Three conditions must be met for consolidation. These three conditions are to be evaluated, separately, and a holistic assessment is not required. If one of these conditions is met, the Court may proceed with consolidation.
The first condition set out in Article 10 is the parties’ consensus as to consolidation. If the parties agree to consolidate, the Court does not need to evaluate any other conditions. However, as stated above, consolidation is at the Court’s discretion, and it is not obliged to consolidate the arbitrations despite the parties’ agreement to that end.
As a second condition, the Court may consolidate the arbitrations if all of the claims in the arbitrations to be consolidated are based on the same arbitration agreement. As is clear, the provision mentions the existence of the “same arbitration agreement,” and not the “same contract.” It should be underlined that “same arbitration agreement” and/or “more than one arbitration agreement” are separate issues than the “same contract” and/or “multiple contracts.” They all have different legal consequences. For instance, disputes might arise from several contracts, but be subject to one arbitration agreement between the parties.
The third condition contains three sub-conditions: If the claims are made under more than one arbitration agreement, (i) the arbitrations must be between same parties, (ii) the disputes in the arbitrations have arisen in connection with the same legal relationship, and (iii) the Court finds the arbitration agreements to be compatible. Under this condition, the Court shall make a holistic assessment; meeting just one of the criteria would not suffice to consolidate the arbitrations.
As stated, above, the Court has broad discretion as to consolidation. In parallel, the conditions set out, above, under the third condition, state the words ‘same legal relationship’ and ‘compatibility’ which entitle the Court with broad interpretation. The same legal relationship is interpreted by the Court as the same economic transaction and, as well, may be the same project. For the sake of compatibility, the Court has no restrictions in taking even just procedural issues into consideration when deciding whether or not the arbitrations are compatible. As to the ‘same parties’ requirement, it can be said that the Court strictly evaluates whether the parties are same or not.
In the second article of this article series as to complex arbitrations, the provisions on the joinder of additional parties and consolidation of arbitrations are examined. The details of the ICC Rules on multi-party and multi-contract arbitrations will be examined in the third and final article of this series.
 Fatih Isik, Complex Arbitrations: An Overall View of the ICC Rules – I, Erdem & Erdem March 2019 Newsletter (http://www.erdem-erdem.av.tr/publications/newsletter/complex-arbitrations-an-overall-view-of-the-icc-rules--i/).